Focusing Versus Diversifying Bank Mergers：The Role of Growth Opportunities and Free Cash Flow

• Main Authors: Yueh-ni Lai, 賴月尼
• Other Authors: Sheng-Syan Chen
• Format: Others
• Language: en_US
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/39155601549004091255

碩士 === 元智大學 === 財務金融研究所 === 90 === I examine the valuation impact of bank mergers through an analysis of different type mergers that are classified according to geographic and activity similarity or dissimilarity. Consistent with previous findings, the market seems to favor focus mergers. After controlling for the Tobin’s Q and free cash flow, I find weak result that when banking firms have high growth opportunities and high free cash flow position, there is no significant difference in market reaction to each type of mergers. This result might imply that negative impact of diversification is not absolute, but is related with the financial resources and growth opportunities.